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EDA Agenda Memo <br /> September 8, 1997,Meeting <br /> Page 2 <br /> • Recommendation <br /> Staff recommends the EDA approve the 1998 Business Incubator <br /> budget in the amount of$63,500. <br /> 6. Micro Loan Application - Olde Main Eatery and Sweet Shoppe <br /> Inc. <br /> Background <br /> The Olde Main restaurant has submitted a micro loan application <br /> requesting $50,000 for a 15 year term at a fixed interest rate of 6 <br /> percent. The purpose of this request is to facilitate the purchase, <br /> remodeling, and furnishing of the building at 313 Jackson Avenue. <br /> The micro loan, in conjunction with bank financing and personal <br /> equity, will be used to move The Olde Main's current business <br /> operations into 313 Jackson Avenue, a facility which is approximately <br /> twice the size of their current space. <br /> The EDA Finance Committee met on Tuesday, September 2, 1997, to <br /> discuss and review this application with the proprietors of The Olde <br /> 1110 Main. After a presentation and discussion of the various issues of this <br /> loan, it was unanimously decided to recommend that the EDA proceed <br /> with a loan to The Olde Main which would have the following <br /> parameters: <br /> • a $50,000 loan at prime rate(8.5%), 15 year amortization, 5 <br /> year balloon <br /> It was determined by the Finance Committee that the request for a 6 <br /> percent interest rate could not be approved given the various <br /> circumstances and details of this loan and its level of risk. The <br /> Finance Committee discussed that there is a somewhat higher level of <br /> risk involved in all restaurant operations, including this one, and that <br /> this risk issue is a driving force behind the recommendation to proceed <br /> with a prime rate interest loan. Also, the fact that in this case the loan <br /> is being used as "gap" financing rather than "incentive" financing <br /> dictates that it should carry a prime rate. <br /> The collateral which will be provided for the EDA loan will be a second <br /> mortgage position behind the First National Bank of Elk River, in <br /> addition to securing liens on any equipment which will be used within <br /> • the business operation. Staff also recommended to the Finance <br />